Group purchasing of products has been carried on for many years, usually in order to take advantage of bulk discounts offered by suppliers. Some time ago, the use of electronic methods for doing business was introduced, and various systems have been developed for the use of electronic data interchange (EDI) to exchange commercial information between, for example, purchasing organizations and suppliers. In most cases, those involved in EDI were interested in business-to-business transactions. In recent years, the growth of the Internet, and its popularization, has led to the extension of such methods to ordinary consumers. It is now possible to use the Internet to purchase books, travel tickets, hotel reservations, and many other goods.
Among the advances seen in recent times is the development of cooperative purchasing on the Internet, by means of which groups of potential customers can place their requirements and bids on the Internet, so that a central organization can carry out purchases on their behalf, again in order to gain the advantage of bulk discounts from suppliers.
U.S. Pat. No. 6,047,266, to van Horn et al., discloses the use of demand aggregation through online buying groups. Such a group is formed for the purpose of buying a particular product by defining various parameters, such as a time window in which the purchase is to be made, the starting price, and the critical mass of purchase offers that is required. Buyers are offered information enabling them to make binding offers for the product, and the system then applies programmed rules to determine whether a purchase can be made at a particular time, and at some point, the cooperative purchase reaches closure. Inventory is then allocated to satisfy the demand.
The problem faced by creators of such systems is typically one of satisfying demand for countable units of products: tickets, cameras, cars, and so on at the best price the customers will bear. When the cooperative purchase process closes a deal, the customers receive their allocated units from the inventory of the supplier. The discount gained is typically based on the number of units included in the deal; the more units ordered in one deal, the lower the price (down to some base price that represents the lowest price at which the supplier is willing to sell).
Typically also, the items purchased using such a system are one-off purchases, such as travel tickets, cars, electronic goods, and so on. The solutions provided in the art fit this model extremely well, but are not easy to adapt to a different model of commerce, such as a repeating bulk product replenishment or bulk material removal service market.
To solve the problems posed by such a market requires a wholly different commercial paradigm and technical approach.